GM Buys Back 200 Million Shares From U.S. Government

Back in 2009, General Motors and Chrysler received tens of billions of dollars from the U.S. government and taxpayers in a bid to keep the ailing automakers afloat. This gave the government a controlling interest in General Motors, and has led to GM being called (often by the haters) “Government Motors”, much to new GM’s chagrin.

But after more than three years, GM has announced that it will begin buying back the stock shares owned by the government at a premium price. Today marks the beginning of the end of “Government Motors” as GM announced it intends to spend $5.5 billion to buy back 200 million shares from taxpayers.

This is the first step in GM’s plans to buy back all of the shares held by the U.S. government within the next 12 to 15 months. The buyback will reduce the government’s ownership in GM from approximately 19%, and GM will pay the U.S. treasury $27.50 per share, a 7.9% premium over the price of GM’s stock price this morning.

This is good news to be sure, and there are other benefits as well…at least for GM’s executives. Once the buyback is complete, the government will remove certain restraints placed on management, such as disallowing the purchase of private jets and executive bonuses. That should make some of the top brass plenty happy indeed, and hopefully this is the beginning of the end of the “Government Motors” stigma.